Intel’s Outgoing CEO Says He Passed On A Chance To Get Intel Chips Inside The First iPhone

Intel’s Outgoing CEO Says He Passed On A Chance To Get Intel Chips Inside The First iPhone

Kevin McLaughlin | May 17, 2013, 7:48 AM | 2,765 | 2

When Steve Jobs unveiled Apple‘s first Intel-powered Macs at a January 2006 event in San Francisco, Intel CEO Paul Otellini made a dramatic entrance, emerging onstage from a cloud of smoke wearing a “bunny suit,” the protective outfit workers wear in Intel’s semiconductor fabrication plants. Otellini didn’t often engage in such bizarre pageantry during his 8-year tenure as Intel CEO, which officially ended Thursday. But the Apple Mac deal was a major coup for Intel, and the bunny suit helped Otellini drive that message home.  Now, as Otellini heads into retirement, he’s talking about an even bigger deal with Apple that he wasn’t able to close. When Apple was working on a prototype for the first iPhone, it approached Intel about making the processor for the device. But Intel passed on the opportunity because it didn’t make sense financially, Otellini told Alexis Madrigal of The Atlantic in an interview published Thursday.  “At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it,” Otellini told Madrigal. “It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.” While Otellini kept Intel on a profitable path, he wasn’t able to figure out how to make Intel relevant in smartphones, the majority of which are running ARM chips. Intel is still trying to figure out its mobile strategy, and incoming CEO Brian Krzanich said Thursday that he plans to fix this. Of course, Otellini isn’t the only tech executive who didn’t anticipate the impact the iPhone would have. Shortly before Apple launched the iPhone, Microsoft Steve Ballmer said it had “no chance” of gaining meaningful market share. Otellini told Madrigal his gut reaction was to pull the trigger on the Apple mobile deal. But he didn’t, and so it’s likely every time Otellini sees someone using an iPhone, he’ll cringe a little bit inside.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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